Thursday, January 13, 2011

The National Petroleum Reserve in Alaska - Where did all of the oil go?

In light of the recent increases in the price of a barrel of oil, I thought I'd take a look at a domestic oil exploration issue since, the most secure supply of oil, is the one that's on "your own property".


Back in October 2010, the United States Geological Survey (USGS) released this fascinating update on the estimated volume of oil and natural gas in the National Petroleum Reserve in Alaska (NPR-A).  It got very little mainstream media coverage, especially in light of the importance to America's domestic energy security.

As background, Alaska's National Petroleum Reserve has a very long history of petroleum exploration.  The 23 million acre Naval Petroleum Reserve Number 4 was established by executive order on February 27th, 1923, by then President Harding, as an emergency oil supply for the United States Navy.  It is located 200 miles north of the Arctic Circle and was selected as an emergency oil supply because geologists surveying the area found several oil seeps.  Administration of the Reserve passed to the Bureau of Land Management (BLM) within the Department of the Interior in 1976 and the Reserve was re-named the National Petroleum Reserve - Alaska (NPR-A).

Here's a map showing the location of the NPR-A along the north coast of Alaska:


Exploration programs in the NPR-A have taken place in three main stages; from 1944 to 1953 by the United States Navy, a total of 91 test wells were drilled adjacent to existing seeps.  The program discovered eight oil and gas fields.  Between 1953 and 1975, only 9 wells were drilled until interest in the NPR-A was rekindled during the 1973 Arab oil embargo.  In the second phase of exploration from 1975 to 1982, the United States Geological Survey (USGS) and the Navy contracted Husky Oil Corporation to drill  total of 36 exploratory wells and shoot 12,000 miles of 2-D seismic.  A total of 136 wells and core holes (stratigraphic tests) were drilled ranging from 100 to 20,335 feet in depth.  Should you be interested in the technical information associated with these wells, here is the USGS link to the NPRA Legacy Data Archive.  In the Archive, you will find information regarding oil and gas shows from each of the wells, logs and the current status of each well along with detailed reports.  Some of the legacy wells were abandoned with no casing, wellhead or complete series of cement plugs.  The BLM has embarked on a program to properly abandon the 37 legacy wells that are considered an environmental risk with 14 of 19 risky wells having been properly abandoned since 2002.  Here is the report entitled "Alaska Legacy Wells Summary Report: National Petroleum Reserve - Alaska" dated November 2004.  One well of particular concern, the J.W. Dalton #1 well, is located on the coast of the Arctic Ocean.  Erosion has removed over 200 feet of shoreline, threatening to spill several thousand gallons of diesel into the ocean from the reserve pit.

The third stage of exploration in the NPR-A has taken place from the mid-1990s to the present.  The BLM has held six oil and gas lease sales in the NPR-A since 1999 and currently administers approximately 246 federal oil and gas leases.  Here is a map showing the current, expired and relinquished leases on the NPR-A:


In October of 2010, the USGS released its latest report on the hydrocarbon potential of the NPR-A entitled "2010 Updated Assessment of Undiscovered Oil and Gas Resources of the National Petroleum Reserve in Alaska (NPRA)".  In this report, they reassess their 2002 estimate of oil and gas reserves in light of new data that has been acquired.  

Before we look at the new data, let's take a step back and look at the data and report from the USGS 2002 estimate:


The 2002 report statistically estimated that there was a 95 percent probability (F95 or a 19 in 20 chance) of encountering 6.7 billion barrels of recoverable oil and a 5 percent probability (F05 or a 1 in 20 chance) of encountering 15 billion barrels of recoverable oil with a mean (most likely) probability of encountering 10.6 billion barrels of recoverable oil.  Likewise, there was a 95 percent probability of encountering 40.4 TCF of recoverable natural gas not associated with the above noted oil reserves, a 5 percent probability of encountering 85.3 TCF of recoverable natural gas and a mean of 61.4 TCF of recoverable gas.

Taking a step back even further in time, the USGS had previously estimated recoverable oil and gas reserves in the NPR-A back in 1980.  Here's the chart showing those estimates compared to the 2002 estimates:


Notice how much higher the recoverable oil and gas reserves are in the 2002 estimate.  Additional oil discoveries had been made in the area between 1980 and 2002 and a "better understanding" of the geology of the NPR-A had led to the development of "improved estimates".

Oil industry interest in the NPR-A was re-kindled in the mid-1990s when the Alpine oil field was discovered by Conoco-Phillips and Anadarko just to the northeast of the NPR-A.  This is the largest onshore field discovered in North America in the last 25 years.  This field is estimated to contain 750 million barrels of oil with 429 million barrels of recoverable oil.  The oil in the Alpine field  is not associated with free natural gas.  This discovery resulted in a push by industry to explore on the NPR-A.

Onward and forward 8 years.  Since 2002, the USGS has had access to even more data.  This new data includes the drilling of 30 exploration wells and acquisition of more accurate 3-D seismic data.  Once industry drilled on Federal lands adjacent to the Alpine field, they noted a change from oil to natural gas within 15 to 20 miles of the Alpine field.  The largest discovery made, the Spark-Rendezvous accumulation, is a very large reservoir system that contains natural gas and condensate at shallower depths and oil at greater depths; this accumulation is so large that if it were entirely oil rather than oil and natural gas, it could be larger than the massive Alpine field.  Wells drilled in other areas have discovered that the quality of the reservoir in the NPR-A is also poorer than what was found in the Alpine area which resulted in a write-down of the natural gas reserves.

With the new data in hand, the USGS recalculated the statistical volume of recoverable oil and natural gas.  Here is a rather busy table showing the brand-spanking new 2010 vintage USGS estimates:


Please don't get distracted by all of the play names and colours; just look at the numbers in red along the bottom of the chart.  With the new data, the USGS has downgraded the most likely estimated volume of recoverable oil to 896 million barrels, down from 10.56 billion barrels in 2002 and 53 TCF of recoverable natural gas, down from 61.352 TCF in 2002.  This is a 91.5 percent downgrade for the recoverable oil reserves and a 13.9 percent downgrade for the recoverable natural gas reserves.  Curiously, the 1990 estimate of 2.1 billion barrels of recoverable oil was a far more accurate estimate than the 2002 estimate that had more data!

Despite the massive reserve write-downs, the NPR-A is still one the top few areas in the United States for oil exploration (which says a lot about the exploration maturity of the remaining areas).  On the downside, the arctic ecosystem is very fragile and any "mistakes" by the oil industry similar to what happened in the Gulf of Mexico will take far, far longer to "fix" since cold temperatures prevent rapid biodegradation of hydrocarbons.

In summary, the oil never really existed, except on paper or in the minds of geologists, so it really has not "disappeared".  As I'm prone to do, I'd like to put the whole exercise into perspective.  While 896 million barrels of oil may seem like quite a large volume, the Energy Information Administration of the United States Department of Energy projects that the United States will consume 19.4 million barrels of oil every day by 2012.  At that rate of consumption, the 896 million barrels of recoverable oil in the NPR-A will be entirely consumed in 46 days!  That puts the size of things into perspective, doesn't it?

Oh yes, and the Alpine field will be used up in just 22 days.

2 comments:

  1. Yeah, but that's 22 days less Saudi jihadi financing oil that we don't have to buy, isn't it?

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  2. But the Gas is there. I still dont understand why the natural gas we have found through fracking and such has not become a more dominant subject when these discussions come up. Plus it is way more friendly to burn natural gas in things like power plants and cars.

    ReplyDelete